1
EXHIBIT 10.16
VENDOR FLOOD INSURANCE AGREEMENT ("Agreement")
entered into by and between
MOBILE USA INSURANCE COMPANY, INC., a Florida insurance company ("Company")
and
INSURANCE MANAGEMENT INFORMATION SERVICES, INC., a Florida corporation
("Vendor")
ARTICLE I - AUTHORITY OF VENDOR
A. Company hereby appoints Vendor to supervise and administer its Write Your
Own (WYO) flood insurance program in the State of Florida, the State of
Arizona and such other states as may be mutually agreed upon in writing
between Company and Vendor.
B. Company hereby grants Vendor the authority to act for and on behalf of
Company in matters required including the authority to collect and remit
premiums, process applications and other forms, issue policies, and process
claims, all in a manner consistent with, pursuant to and as authorized by the
provisions of the National Flood Insurance Act of 1968, as amended, the Flood
Disaster Protection Act of 1973, as amended, the regulations of the National
Flood Insurance Program (NFIP/Write Your Own Program administered by the
Federal Emergency Management Agency (FEMA),) (herein, collectively called the
"WYO Program"), and the terms of this Agreement.
C. Vendor hereby accepts such appointment, and the grant of authority, and
agrees to carry out the resulting duties and responsibilities to the best of
its ability, knowledge, skill, and judgment and in accordance with the
highest reasonably attainable standards of quality generally utilized in the
insurance and data processing industries.
ARTICLE II - SPECIFIC RESPONSIBILITIES OF VENDOR
A. Vendor shall be responsible for the following:
1. Policy Administration in accordance with the WYO Program, including:
a. Community Eligibility/Rating Criteria;
b. Policyholder Eligibility Determination;
c. Policy Issuance;
d. Policy Endorsements;
e. Policy Cancellations;
f. Policy Correspondence;
g. Payment of Agents' Commissions (on Company's behalf); and
h. The receipt recording control, timely deposit, and disbursements of
funds in connection with the foregoing (a through g), in accordance
with the WYO Financial Control Plan requirements established by the
FCP ("Financial Control Plan").
i. Respond to written and telephone inquiries from Policyholder and/or
Producer.
2. Claims Processing, in accordance with general Company standards and the
WYO Financial Control Plan. Vendor may also rely on information contained
in the WYO Claims Manual, the FEMA Adjuster Manual, the FIA/NFIP Policy
Issuance Handbook, the WYO Operational Overview, or other WYO Program
instructional material.
a. A catastrophe team providing claims support will be engaged at the
descretion of the Vendor.
3. Preparing and submitting to the FIA monthly financial and statistical
reports, reconciliations, certifications and statistical reports on
Company's behalf, in accordance with the WYO Program Accounting
Procedures. Vendor shall submit copies of all monthly reports to the
Company.
B. Vendor shall provide assistance, at no additional cost, to Company agents
in writing flood business to which this Agreement relates by: (1) procuring
for each appointed agent a limited license to use the
2
FloodWriter(c)(TM) rating program, and (2) providing current flood zone
determinations for each such policy application requested.
C. Vendor shall coordinate activities and shall provide information to the FIA
or its designee whenever a Flood Insurance Catastrophe Office is
established.
D. Claims administration use of Company's staff adjusters or Company's outside
adjusters will be first course of action. If these are not available.
Vendor will select independent adjusters.
E. Vendor shall keep appropriate records in accordance with Internal Revenue
Service regulations in order to prepare 1099 reporting for agents'
commissions and adjusters' fees paid by Vendor on behalf of Company.
F. Vendor shall use for best effects to adhere to the following time standards
for performance when processing documents, claims, requests or inquiries:
1. Application Processing - 15 days (Note: If the policy cannot be mailed
due to insufficient or erroneous information or insufficient funds, a
request for correction or additional moneys shall be mailed within 10
days);
2. Renewal Processing - 7 days;
3. Endorsement Processing - 7 days;
4. Cancellation Processing - 15 days;
5. Simple Correspondence and Status Inquiries - 7 days;
6. Complex Correspondence and Inquiries - 20 days;
7. Requests for Supplies, Materials, and Manuals - 7 days; and
8. Claims Draft Processing - 7 days from completion of file examination.
The elapsed time shown is from day of receipt through and including day
of mail-out, and shall not include any Saturday, Sunday, or state or
national legal holiday.
G. Vendor shall, on a timely basis, accurately convert and migrate from
current Vendor all policy data for in-force business. This will be at no
expense to the Company.
ARTICLE III - PREMIUM COLLECTION AND ARRANGEMENT
A. Vendor and Company shall establish banking arrangements which comply with
the FEMA/FIA Financial Assistance/Subsidy Arrangement ("Arrangement") and
other WYO Program requirements, and which will provide for the establishment
of an NFIP restricted account with Company as custodian, and/or a FEMA
Letter of Credit, with additional accounts as needed to facilitate
operations, all in conformity with FEMA guidelines. Company shall grant
specific Vendor employees check-signing authority on accounts and the
authority to initiate appropriate (drawdowns against Company's Letter of
Credit, in order for Vendor to act on Company's behalf in making
disbursements for Company liabilities established by the Arrangement, the
WYO Program, and this Agreement. All such authorizations shall be in writing
and may be revoked amended or modified at any time by Company upon 30 days
advance written notice to Vendor. Vendor shall be liable to the FIA for any
and all premiums Vendor has received on business written under this
Agreement. Vendor shall establish procedures for the timely deposit and
remittance of funds to the U.S. Treasury via the authorized automatic
clearinghouse mechanism.
B. Vendor shall maintain supporting documentation for all bank accounts over
which it has authority. Monthly, Vendor shall prepare financial data, by
state, reflecting all debits and credits with respect to flood insurance
business written, including agents' commissions and Vendor's servicing fees
paid, during the preceding month. Vendor shall submit such data and reports
no later than the 20th of each month.
ARTICLE IV - COMPANY ACCESS TO RECORDS
Company, by its duty appointed representatives, shall have the right at any
reasonable time to examine papers in the possession of Vendor covering flood
insurance business written hereunder.
ARTICLE V - EXPENSES AND FEES
3
A. Company shall pay Vendor a monthly servicing fee per schedule below. Vendor
shall pay the general expenses of processing flood insurance business
pursuant to this Agreement, including those of policy administration,
claims processing, and financial and transactional reporting.
Calendar Year Net Written Premium IMIS Fee (As a % of Net Written Premium)
--------------------------------- ----------------------------------------
$ 0 - $ 4,999,999 8%
$ 5,000,000 - $ 9,999,999 7.5%
$10,000,000 - $19,999,999 6.0%
$20,000,000 and above Renegotiate
B. Company shall pay all taxes, including state premium taxes and fees,
municipal taxes and fees, agents' commissions, or any board, exchange or
bureau assessment.
C. WYO Program Reimbursements made pursuant to the Arrangement, including, but
not limited to, those for the unallocated loss adjustment, the allocated
loss adjustment, and for approved special allocated loss expenses, shall be
payable to Vendor.
D. Claims Administration (Full Service): Vendor shall retain 3.3% of the net
claim after application of the deductible. Salvage: 5% of recovery (after
expenses) if Company's adjuster handles the salvage. If Vendor assigns the
adjuster and handles the salvage, Vendor will receive 10% of recovery after
expenses. Subrogation: 10% of recovery (after expenses). If Vendor assigns
the adjuster and handles the subrogation, Vendor will receive 25% of
recovery after expenses.
ARTICLE VI - ADDITIONAL SERVICES AND FEES
A. Full Book Flood Zone Determinations - A zone determination on each of (or a
portion of) Company's homeowners policies is available at a cost of $10.00
per policy.
B. Agent or Company Training - Upon request, Vendor will provide one training
session per quarter, or four training sessions per year, to Company or
Company's agents. Company shall provide the training facility and shall
reimburse Vendor for travel expenses incurred.
C. Marketing Materials - Company may use Vendor's previously developed
marketing or promotional materials, which Vendor shall customize and
produce for Company, at Company's expense.
D. Any fees and services not defined in this agreement will be mutually
agreed upon between the Company and Vendor as required.
ARTICLE VII - CONFIDENTIALITY OF DATA AND INFORMATION
A. Vendor and Company acknowledge that any and all information concerning the
other's business is "Confidential and Proprietary Information" and neither
party shall permit the duplication, use, or disclosure of any such
"Confidential and Proprietary Information" to any person (other than its
own employees, agents or representatives who must have such information for
the performance of obligations hereunder), unless such duplication, use, or
disclosure is specifically authorized in writing by the other party.
"Confidential and Proprietary Information" is not meant to include any
information which, at the time of disclosure, is generally known to the
general public and/or the insurance industry.
B. Neither party shall use or duplicate the name(s), trademarks(s),
servicemark(s), or trade name(s) (whether registered or not) of the other
party in public releases or advertising or in any other manner unless such
use or duplication is specifically authorized in writing by the other
party, except that Vendor may include Company's name in a list of
clients/customers without such authorization.
C. Company shall not disclose the terms of this contract especially the
pricing structure, under this Agreement without prior written consent of
the Vendor.
D. Vendor shall maintain systems integrity and data security necessary to
protect Company's records and data from loss and damage and to protect
against unauthorized disclosure of Company's confidential and proprietary
data as described in this Article.
E. The disclosure restrictions provided in this Article shall be extinguished
at the time and to the extent that the confidential information becomes
generally available to the public domain without the fault of Vendor.
4
ARTICLE VIII - COMMENCEMENT AND TERMINATION
A. This Agreement shall become effective on the date that this document is
executed by Company and by Vendor, and shall remain in force for one (1)
year. It may be terminated at any time after the one (1) year by either
party sending written notice of termination to the other, not less than
ninety (90) days prior to the termination date.
B. This Agreement may, at the option of the Company, be terminated in the
event that Vendor fails to perform any of the terms and conditions of this
Agreement and such failure continues for a period of ninety days after
written notice given by Company to Vendor specifying the nature of the
default(s).
C. Upon termination of this Agreement, Vendor shall fully account to Company
for all of its responsibilities and activities pursuant to this Agreement,
and cooperate with Company or designated representative to transfer all
policy and status data on a timely and accurate basis.
ARTICLE IX - LIABILITY
A. In no event shall Vendor's liability for breach of this Agreement or any of
its provisions exceed the Company's liability to FEMA in connection with
the Write Your Own Flood Insurance Program. Vendor shall not be liable for
any loss of profits, business goodwill, or other consequential, special or
incidental damages. If either party should bring a Court action alleging
breach of this Agreement or seeking to enforce, rescind, renounce, declare
void or terminate this Agreement or any provisions thereof, the prevailing
party shall be entitled to recover all of its legal expenses, including
reasonable attorney's fees and costs (including legal expenses for any
appeals taken), and to have the same awarded as part of the judgment in the
proceeding which such legal expenses and attorney's fees were incurred.
B. Company shall be held harmless for any and all adverse acts or omissions of
Vendor arising out of, and in conjunction with, this Agreement. Company
shall be indemnified for all costs and expenses incurred as a result of the
adverse actions or omissions of Vendor.
C. Vendor shall be held harmless for any and all adverse acts or omissions of
Company arising out of, and in conjunction with, this Agreement. Vendor
shall be indemnified for all costs and expenses incurred as a result of the
adverse actions or omissions of Company.
ARTICLE X - MISCELLANEOUS
A. Applicable Law: This Agreement and all matters arising thereunder shall be
governed and determined in accordance with the Federal laws applicable to
the National Flood Insurance Program. Where such law does not provide the
rule for decision, any matters in controversy or dispute shall be governed
and determined in accordance with the laws of Florida.
B. This Agreement contains all of the prior oral and/or previously written
agreements, representations, and arrangements between the parties hereto.
There are no representations or warranties other than those set forth
herein.
C. Company Warranties: Company warrants that it has entered into an Agreement
with FEMA pursuant to which it is authorized to issue flood insurance
policies or coverage, and that it is licensed to engage in the insurance
business in all jurisdictions in which it authorized Vendor to issue any
flood insurance policy or coverage in Company's name.
D. Vendor Warranties: Vendor warrants to Company that it is duly incorporated
and authorized to transact the business of servicing insurance companies.
Invalidation. Should any part of this for any reason be declared invalid, such
decision shall not effect the validity of any remaining portion, which remaining
portion shall remain in full force and effect as if the had been executed with
the invalid portion thereof eliminated. It is, therefore, declared the intention
of the parties hereto that each of them will have executed the remaining portion
of this without including therein any such part, parts or portion which may, for
any reason, be hereafter declared void.
Modification. No change or modification of this shall be valid unless the same
shall be in writing and signed by all of the parties hereto.
5
Notices. Any and all notices, designations, consents, offers, acceptances,
or any other communication provided for herein shall be given in writing by hand
delivery, by overnight carrier, by registered or certified mail or by facsimile
transmission and shall be addressed as follows:
As to: Insurance Management Information Services, Inc.
P.O. Box 15707
St. Petersburg, Florida 33733
Attn: Anne M. Sullivan
Fax# (813) 822-0484
As to: Mobile USA Insurance Company, Inc.
7785 66th Street North
Pinellas Park, Florida 34665
Attn: Frank J. Lake
Fax# (813) 541-1608
Notices sent by hand delivery shall be deemed effective on the date of hand
delivery. Notices sent by overnight carrier shall be deemed effective on the
next business day after being placed into the hands of the overnight carrier.
Notices sent by registered or certified mail shall be deemed effective on the
third business day after being deposited into the post office. Notices sent by
facsimile transmission shall be deemed to be effective on the day when sent if
sent prior to 4:30 p.m. (the time being determined by the time zone of the
recipient) otherwise they shall be deemed effective on the next business day.
IN WITNESS WHEREOF, the parties hereto by their respective duly authorized
representatives have executed this Agreement to be effective as of 1st day of
January, 1996.
"Vendor" "Company"
INSURANCE MANAGEMENT MOBILE USA INSURANCE
INFORMATION SERVICES, INC. COMPANY, INC.
by: /s/ Robert G. Menke by: /s/ Frank J. Lake
-------------------------------------- ------------------------------
Robert G. Menke, Senior Vice President FRANK J. LAKE
----------------------------
as its: PRESIDENT
------------------------